Allstate Insurance Company has defied a court order that forced them to produce what has become known as the McKinsey report. It’s been three months since the order and Allstate still hasn’t produced the documents – leaving them with an escalating fine total of over $2.4 million!

What is the McKinsey report?

Allstate reportedly hired the McKinsey Company, a New York consulting firm, in the mid 1990’s to show the insurer how to increase their profits. McKinsey told them to avoid paying claims, and when they do pay – pay less. Allstate allegedly saved $700 million and increased their stock price at the same time after taking McKinsey’s advice. The most damaging part of the reports involved two analogies where McKinsey said that, 1) policyholders who accepted lower settlement offers were “in good hands” (Allstate’s slogan), but those that fought the settlement offer should get Allstate’s “boxing gloves”, and 2) Allstate should take an “alligator approach” to claim payments and settlement offers – meaning that the company should just “sit and wait” in the hope of frustrating policyholders to accept less or simply go away.

Why won’t Allstate produce the report?

It’s clear that the information contained in the McKinsey report would damage Allstate’s reputation; however, the company says that the report contains “trade secrets” and confidential “claims practices” that it will not allow others to see. The company has said that it would produce the report, which consists of thousands of documents and power point slides, only if the court agrees to seal the information – meaning that the information would not become public. So far, the court has refused to do so.

How this all began

Paul Aldridge’s vehicle ran into the back of a truck in Hawaii in 2000. Allstate was his insurer and refused to pay his claim for many years. He sued Allstate for bad faith, but the case has taken on a life of its own after parts of the McKinsey report were revealed. Since then, his lawyer, Allstate’s lawyers and several judges have been battling over whether Allstate must produce the report. Several trial courts sided with Allstate; however, the Missouri Supreme Court overturned the lower courts’ decisions, required Allstate to produce the report and imposed the $25,000 a day fine. The big question is – who gets the money? According to news reports, the $2.4 million in accumulating fines would go to Aldridge.

This case is just one of many examples where an insurance company has been accused of doing whatever it can to avoid paying valid claims. If your insurance company has avoided paying your valid claims, they too may have acted in bad faith. To contact a qualified attorney whose practice focuses on bad faith insurance litigation, please click here.